New home sales set another record

U.S. April sales rise 0.2% to 1.316 million annual rate

WASHINGTON (MarketWatch) - Sales of new U.S. houses were essentially unchanged in April, rising 0.2% to a seasonally adjusted annual rate of 1.316 million, the Commerce Department reported Wednesday.

It's the highest sales rate ever.

March's sales pace was revised sharply lower to 1.313 million annualized from 1.431 million. Read the full report.

Economists were expecting sales of about 1.33 million in April, according to the survey conducted by MarketWatch. See Economic Calendar.

On Tuesday, the National Association of Realtors said turnover of existing homes rose 4.5% to a record 7.18 million annual pace. See full story.

The number of unsold new houses rose 0.2% to 440,000, a 4.1-month supply at the April sales pace.

The median sales price of a new home rose 3.8% year-over-year to $230,800.

Sales surged 37.2% in the tiny Northeast market and rose 2.8% in the West. Sales fell 5.3% in the South and dropped 0.5% in the Midwest.

The hot housing market is fueled by still-low interest rates, rising incomes and a widespread belief that real estate is the best investment. Last week, Federal Reserve Chairman Alan Greenspan said he saw signs of "froth" in some local housing markets, but said there was no national speculative bubble in housing.

"A correction in housing activity, meaning sales and ultimately construction, is therefore inevitable, although signs of oversupply -- such as inventories of unsold homes -- do not suggest that the correction is imminent," wrote economists for Goldman Sachs in a note to clients.

"When it comes, it could be a doozie," the Goldman Sachs' note continued. "Some simple calculations suggest a hit worth about 3% of GDP."

The government cautions that its housing data are extremely volatile and subject to large sampling and other statistical errors. It can take up to six months for a new trend in sales to emerge.

In the past six months, sales have averaged a record 1.25 million annualized, unchanged from a month ago.

In all of 2004, 1.203 million new homes were sold.

Earlier Wednesday, the Commerce Department said orders for durable goods increased 1.9% in April, the first gain in 2005. See full story.

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